Nvidia stock what happened?

$1 trillion valuation mark

Nvidia, the semiconductor giant renowned for its cutting-edge technologies, has made headlines with its ascent into the trillion-dollar market cap club, following the release of its earnings report on May 24, 2023. Becoming the seventh public U.S. company to finish a trading session in $1 trillion territory.

The market's enthusiastic response propelled the stock to soar by almost 30% on the day. However, this recent surge is only a fraction of the remarkable growth it has achieved throughout the year, with its stock nearly tripling in value and surging around 175% on a year-to-date basis.

In addition to crossing the $1 trillion valuation mark, Nvidia has joined the league of tech giants including Apple Inc., Amazon.com Inc., Alphabet Inc., and Microsoft Corp

The company's impressive earnings report, fueled by soaring demand for its AI processors, sent shockwaves through the market, propelling its stock to new heights. Let's delve into the factors behind Nvidia's meteoric rise and explore why it has become one of the top-performing stocks of 2023.

Strong fiscal 2023 Q1 performance

The company generated a robust $7.2 billion, exceeding expectations of $6.5 billion. which marked a 13% year-over-year decrease but a significant 19% increase from the previous quarter.

In terms of the company’s earnings, it achieved $0.82, indicating a 28% year-over-year increase and a substantial 44% quarter-over-quarter growth.

Meanwhile, non-GAAP (excluding specific expenses) earnings per share stood at $1.09, reflecting a 20% decline compared to the previous year but a notable 24% increase from the previous quarter.

Price of the company’s share was $289 before the earnings bell going up to $378 by the end of May. With currently being priced at $410.

AI-Driven Growth

The driving force behind this lies in the surging demand for processors that power artificial intelligence (AI) applications. As AI continues to revolutionize industries, Nvidia's data center revenue, including AI chips, soared to new heights.

The segment experienced a remarkable 14% year-over-year increase, setting a record. Moreover, the data center revenue surged 18% compared to the previous quarter, highlighting the company's sustained growth momentum.

The firm's long-term growth potential seems highly promising, bolstered by a significant number of analysts raising their target price for the stock. An example of this is JP Morgan analysts, who recently increased their target price to $500. Similarly, Barclays analysts have also revised their estimates to a comparable price, reflecting the positive outlook for the company's future.

Recovering Gaming Segment

In addition to its success in the AI realm, Nvidia's gaming segment displayed signs of recovery. Despite a 38% year-over-year decline in revenue, the segment experienced a promising 22% sequential growth.

Tech Sector's Resurgence

Nvidia's ascent to the trillion-dollar club is part of a broader trend within the technology sector. After a lacklustre 2022, technology stocks have rebounded strongly in 2023, buoyed by easing bond yields, the tailwinds of AI adoption, and investor optimism surrounding potential shifts in Federal Reserve policies.